Short-selling in Celltrion up after moving to Kospi

Celltrion Inc., South Korea’s leading biosimilar manufacturer and the fourth-largest stock on the country’s benchmark Kospi index moved out from junior Kosdaq market earlier this year to avoid volatile short selling but such orders have increased after the shift.

According to the Korea Exchange on Sunday, Celltrion’s short-selling balance amounted 8.9 trillion won ($7.9 billion) from Feb. 9 to Nov. 22 or during the first nine months since the stock moved to the main Kospi from junior Kosdaq. The short-selling balance accounted for 14.1 percent of the stock’s total transaction amount over the cited period, 3.9 percentage points higher than the figure for the one year period right before it exited the junior bourse.

As of Nov. 20, its short-selling balance was estimated at 2.5 trillion won and made up 8.9 percent of its overall market capitalization.

Celltrion exited Kosdaq and was re-listed on Kospi in February. The transfer was requested by minority shareholders in September last year, who asked for the move to help the stock value and protect investors from short selling.

Currently, the biosimilar maker’s marketing and distribution arm Celltrion Healthcare Co. is the largest stock on Kosdaq. Its minority shareholders also are gathering voices to petition for a shift to Kospi.

Short selling is a legitimate investment scheme that investors borrow shares and sell them immediately on bets that share value will decline, which allows them to then repurchase the shares at a lower price and make a profit on differences. But it can sometimes be abused as profit-taking and speculative means ahead of unfavorable news.